Get the top HN stories in your inbox every day.
tzs
Cerium
Based on my personal experience I would recommend staying away from TaxCloud. When they make mistakes filing for you (and they have) the states will come to you directly with scary letters, TaxCloud won't answer your calls or messages. The only way I was able to sort things out was by getting another states small business advocate to help.
TaxCloud also has a habit of changing their fees without notice. Currently they charge an API access fee even for their "free" accounts.
Finally, they lock you in by not giving you enough information to cancel all the accounts they started for you in other states but not providing a clear way to cleanly close your account.
cryptoized
Thanks for the insight, I hope SST get more adaption.... https://www.streamlinedsalestax.org/.
teamspirit
How quickly my excitement disappeared when I saw that California was not a member. Thanks for the information; I'm sure there are others, like myself, that have no idea such a thing exists.
tzs
I'm somewhat baffled by California not being a member.
California's threshold below which out of state remote sellers do not have to register, collect, report, or remit sales tax is $500 000/year of sales into California.
If I'm a remote seller using the free SST option to handle my taxes in the SST states, and am selling say $300 000/year in California, I will not be collecting any California tax.
If they joined SST, I would have to collect California tax even though I'm below the threshold because the deal to get free full service tax handling under SST is that I collect for all SST states.
I don't see any downside for California. At the stroke of a pen, they would suddenly be getting tax collected from a ton of remote sellers that fall below the $500 000/year threshold.
Same with Texas, which also has a $500 000/year threshold, or New York which is $500 000/year and 100 transactions, or Florida which is $100 000/year, or Illinois which is $100 000/year or 200 transactions.
gamblor956
California is not a member of the SST because it does not currently tax a number of things that are subject to tax under the SST regime. For example, digital goods are taxable in SST states but not in California.
Similarly, there are a number of other product categories where CA's taxability classifications do not match the SST's classifications.
Generally, the total tax they could collect from remote (non-CA) sellers below the $500k nexus threshold is not worth the effort it would take to change things so that CA could join the SST, and moreover, it would require significant changes by CA sellers.
Generally, those same considerations also apply in NY: the cost burden on local sellers to make the change would dwarf any minuscule tax increase from joining the SST.
quercusa
The $500,000 threshold is, IIRC, for companies that don't have a 'nexus' in California. As of a few years ago, having a single remote employee in California was enough to create a nexus, causing you to be treated as a California-local company.
kmoriarty
This is spot on. It's an interesting program perhaps, but unfortunately a lot of states are missing including California, Texas, Colorado, Florida, Illinois, New York, Massachusetts, South Carolina, and we're not seen any uptake from other states toward adoption either.
ysavir
I had no idea this was a thing! You should submit it to HN as its own item.
ilikehurdles
Disappointing that I live in the only non-participating state. Wonder what motivated Colorado to reject this.
KingMachiavelli
Interesting. Why is CO not participating? Looks like every other state is involved to some extent.
gamblor956
CO has a very unique sales tax system: every county, city, and special district can set its own rates, and define taxable (or nontaxable) product categories, and determine the taxability of of those product categories, and even apply special (formulaic) discounts for complying with the tax regime. Plus, a number of tax jurisdictions overlap. And this is the simplified system that the state implemented in 2019 to make things easier for remote sellers in a post-Wayfair world.
And that doesn't even include the roughly 70 home-rule cities which administer their sales tax separately from the state's "simplified" tax system.
For filing purposes, each CO "tax location" is treated as a separate return by Avalara and other sales tax services providers, so the costs can add up very quickly for remote sellers using these services for sales tax reporting compliance: Denver alone has more than two dozen separate "tax locations." Consequently, at my company we use Avalara to compute sales tax for remote sales to CO but file the CO returns ourselves and save several thousand $$$ each month.
Luckily, due to Wayfair nexus requirements, CO sales tax compliance only kicks in at 100k or more in gross sales to CO (not including sales to home-rule cities). Because each home-rule city has its own sale tax system, the nexus threshold is independent for each home rule city; the state has advised these cities to set a threshold of $100k to avoid nexus-related litigation that could result in a bright-line rule setting an undesirably high threshold for nexus.
velcrovan
Because Colorado has the most garbage sales tax regime in probably the world.
vvoyer
I was lucky to be part of the beta for my SaaS (https://turnshift.app) and I must say this new feature simplifies things A LOT.
Especially as a EU business owner, I previously had to sync every VAT tax rate possible, use a complex workflow to know if a customer needed to pay taxes or not, link tax rates to customers, and create taxes reports for my accountant. Stripe tax does all of that automatically, based on the customer full address and VAT numbers.
Here's a twitter thread of everything you had to do previously: https://twitter.com/vvoyer/status/1347488977738149888
PS: Yes there were other services (Paddle) providing this (and much more to be honest), but the Stripe API and customization options makes it my go-to solution for integrating payments.
ttoinou
report taxes. Stripe tax does all of that
US filing partner TaxJar EU filing partners Taxually Marosa"
vvoyer
Thanks, I updated my comment.
______-
> It doesn't say they file the taxes for you
Yay for automation, but is using third parties to file taxes not open to fraud and potential error (if you don't do it yourself?)
hobs
Literally all companies pay other people (accountants, lawyers) to do their taxes and in many cases they are third parties so no, that is not the case.
https://www.irs.gov/businesses/small-businesses-self-employe...
dangrossman
I pay TaxJar to prepare and file my sales tax returns for me.
Stripe just acquired them in April.
staticassertion
Gusto files your taxes for you.
Cthulhu_
Yeah, but they would lose their license and customers and be sued for damages. The world is not a libertarian / individualistic wild west.
revorad
I was part of the beta too for my education site (https://learnetto.com) and I couldn't agree more - Stripe has done a stellar job.
mytailorisrich
The downside is of course that Stripe takes over more and more of your important infrastructure. A question should always be how to include several suppliers and/or how to change supplier in order not to put all in your eggs in a single basket.
zbentley
This sounds a little like the big sites I've worked on that spent immense amounts of money on being database-agnostic, "so we can switch from Mysql/Postgres/Oracle to $other if we want".
Nobody ever wanted to switch; the expertise in using one provider created immense inertia. And even when a few folks (fans of $other working side-of-desk) tried to make a proof-of-concept swap, it turned out that the code was anything but agnostic and dependent on the first provider it was built for in pervasive and fundamental ways.
So, too, with service providers and partner businesses. Spending time/money on being able to switch suppliers and keeping all your eggs from being in one basket is a waste of time: you won't switch voluntarily, and if you ever have to switch involuntarily it'll still be about as difficult as it would have been if you hadn't prioritized redundancy/diversity.
mytailorisrich
At a minimum, implementing an abstraction layer around all external services really is software development 101.
For some services it's also not just being able to switch, it's having more than one used in production. If you manage that then switching is no longer a problem since it's already implemented! That's important for key services.
yannoninator
The cost of letting Stripe do all the work than moving over to another provider is extremely costly and can damage sales.
Unless your provider really sucks, it's always important to evaluate carefully and ideally stick with them unless it is really that bad.
mytailorisrich
> The cost of letting Stripe do all the work than moving over to another provider is extremely costly and can damage sales.
Yes, that's exactly my point: At some point you are completely locked in with a single supplier that holds your entire income stream and perhaps even more than that.
Ideally (easier said that done, I know) you want to have at least 2 suppliers for any key piece of infrastructure as early as possible and to avoid letting a supplier 'expand' the number of tasks they do for you too much.
The latter seems to be Stripe's strategy: They start with payments then expand step by step in everything related et even in things like company incorporation.
toomuchtodo
Do you feel like the value is worth with the fee Stripe is charging?
yannoninator
YES, considering the only best competitor in this space Paddle takes 5%.
Taxes is the reason why in the past most EU/UK businesses go to Paddle. Stripe's Tax feature now saves people who were considering Paddle a lot of time now.
Silhouette
Here's some current Stripe UK pricing, confirmed on their site today.
Baseline of 2.9% + £0.20 for international card payments. (It's reduced to 1.4% + 20p for European cards.)
Add 2% for currency conversion. The exchange rate used is stated as "the daily mid-market rate provided by our service providers".
Add 0.5% for Billing if you're using subscriptions.
Add 0.5% more if you're using this new Stripe Tax functionality.
That is significantly over 5% for a typical SaaS or merchant selling digital content online, making international sales in multiple currencies.
Given that merchant of record services like Paddle are providing functionality far more comprehensive than Stripe Tax appears to be, they're still going to be attractive for smaller merchants compared to the more traditional PSPs like Stripe.
It's probably worth pointing out that while the EU has a long track record of making VAT difficult for everyone, plenty of other countries around the world and even some smaller regions seem to be jumping on the bandwagon lately. If all of these governments start attempting to enforce their local laws extra-territorially (leaving aside any questions about the legality and/or morality of doing so for this discussion) without also introducing reasonable de minimis thresholds to avoid grossly disproportionate compliance costs for negligible extra tax revenues in low volume situations, the situation could get very messy.
If that does happen and businesses are forced to comply with all rules globally regardless of actual sales volumes, I don't see how the model uses by traditional PSPs like Stripe has any chance of surviving. Every small business will have to sell via intermediaries like Paddle to shift the tax responsibilities to a larger business with the resources to deal with it, and pay whatever premium the market decides that justifies on all affected international sales.
scubakid
With this new Stripe solution, do you still have to register for licenses to collect tax everywhere and remit the sales tax to various US states and foreign governments? Unless I misunderstand, that still sounds prohibitively onerous for anyone working as a solo dev or very small team..
tonyedgecombe
That's the reason I use 2Checkout (formerly Avangate). I can issue one invoice a month, in my own currency. That saves a lot of work and aggravation.
outcoldman
Do you know if Paddle files taxes for you? And just send you 1099? Or it is similar to Stripe Tax, they just collect and you have to file taxes?
throwokay
I thought Avalara was the leader in this space. What is their pricing, I can't find it on the site.
undefined
pier25
What about invoicing to the customer?
AFAIK Paddle solves that too but Stripe doesn't.
undefined
devops000
I think you still need to collect VAT ID on your website and associate it to a stripe customer
edwinwee
Nope, no need! Tax ID is validated when you accept the payment: https://stripe.com/docs/tax/checkout#create-session.
vvoyer
Precision: if you're using Stripe checkout only. On a custom integration you do need to get the customer VAT ID and add it to your Stripe customer
devops000
Wao! Does it works for metered-usage plans too?
pier25
So what are the advantages of Paddle?
Silhouette
Most importantly, they become the merchant of record. In other words, they're a separate legal entity reselling your product to your end customer, and therefore they are the ones who deal with almost all of the corresponding tax and legal responsibilities. You then deal with them through a B2B relationship, in which they give you you the collected revenues minus their fees every now and then, and you provide your product to the customers they've sold it to in return. Your own accounts and tax responsibilities are dramatically simplified as a result, though typically with a merchant of record arrangement (with Paddle or any other) you trade that off against some loss of control and higher fees.
usaphp
They support PayPal
nickpp
Honest question: can somebody enlighten me about Stripe's appeal? I am not an user (until recently they weren't even available in my country) but I used ShareIt (now Digital River) 20 years ago and Avangate (now 2checkout soon Verifone) in the past 15 years and they both:
- had a much larger international presence, with localizations and everything
- had sales taxes, VATs etc computed from day one
- had cart (not sure about ShareIt though) & API
- integrated countless payment gateways: from credit cards to purchase orders, wire transfers and even PayPal
How comes Stripe won even if they arrived much later on the market? I believe their pricing structure was not very far from the competition. What did they offer to attract users even though they lacked such important features?
I want to learn.
tylerrobinson
The developer experience and ease and speed of integration are second to none. They managed to take a commodity service performed by many incumbents and make it so effortless that it blows away the competition.
nickpp
Yes, I heard that (couldn't test it myself). The integration for Avangate for example was a proof-of-concept PHP file and a couple of docs explaining the CGI parameters. Not great but not that horrible either.
But were those so incredible that it made up for the missing features? I mean if it was me I wouldn't implement the sales tax myself in a million years, no matter how nice the experience and integration was...
spiralganglion
Stripe came up in an era when nobody in the US worried about taxes, generally speaking. That's changing now.
treve
It's pretty weird hearing anyone talk about CGI parameters these days, so perhaps that should also tell you something?
alasdair_
Disclaimer: I now work at Stripe but the following was purely when I used them as a user:
Stripe targeted developers from day one and made it extremely simple to get up and running (literally seven lines of code for a working payments system) and they documented their api very well.
Then they added on a lot of stuff that made me (as a user) happy, like paying out to my bank account a lot more quickly than the competition, adding recurring subscriptions with a few more lines of code etc.
Basically, their systems just worked out of the box and were more polished than others that I used.
ad8e
If I want to know how much Stripe will cost, I can visit Stripe's webpage and see all the fees laid out. It doesn't tell me "Talk to sales", which is common in the payment/tax calculation business.
sumedh
Stripe's documentation and API integration was so simple compared to Paypal and others.
nickpp
I believe that. But on the other hand you had to implement sales tax - that seems to me a few orders of magnitude more complicated. Was it worth the tradeoff maybe?
hobofan
Sales tax is not a "I need this at launch" feature. Many companies start out in a single market where you can just hardcode the tax rates if you want, and worry about that later (and then the engineering hours to add sales tax etc. are probably not a threat to your existence).
grecy
Banking in the US is at least a decade behind the rest of the developed world. Bank to bank transfers, credit cards, etc. etc. are all like banking in Australia in the late 90s.
So for those in the US, Stripe is amazing. For those of us outside the US, it's just like all the other options we've had for 10+ years (as you said)
voiper1
Besides for the extreme ease of documentation (which is getting a little harder now that there's so many different services), Stripe gained a lot of traction at the start.
Stripe was one of the first credit card acceptance companies with $0 monthly fees. I was paying a merchant account monthly, then authorize.net gateway fee, then an extra $20 to authorize.net to store tokens. Then the per-card fees were somewhat opaque with every card (qualified vs non-qualified) having different pricing.
With stripe, it became much lower risk: pay a set fee for each transaction. No monthly minimums.
Many of the credit card companies have moved to this model, but it was rather cutting edge and seemed much more "fair" for a commoditized gateway.
maxmcd
I have to say that when I first evaluated Stripe I was comparing it to things like authorize.net. I haven't meaningfully looked at the other available options since. Stripe is easy and known and I haven't gotten org pushback about it. So maybe just ignorance?
Thanks for sharing these options.
franciscop
This is so on point. About a year ago I was thinking of opening a company and selling digital products with Stripe in Japan (where I live). They offered a quick free call to answer my questions, and I did so. I am not fluent in Japanese so any help I'm offered I take it, and I wanted to know how many other troubles I could face at this endeavor.
All my questions were answered promptly and greatly by them, and I was getting more and more convinced to do it. Until I asked, "Stripe handles sales taxes, right?" and the answer was "no". They gave me a brief overview of how that works though. Let me tell you I know why you don't see an "Amazon of Japan", apparently in here I'd have to calculate the sales taxes for every country where my products are sold through agreements of Japan-{said country}. Some countries don't even have agreements like Brazil so they are in a gray area.
It seems like Stripe Tax might be a game changer for this specific situation! I'm not ready right now personally/professionally to try to do the company, but let's see in 6 months - 1 year. I am so jubilant!
PS, this is from a quick conversation I had ~1 year ago, so some small details might be fuzzy/outdated/incorrect. Ofc this is no legal or accountant or any kind of advice, just my experience.
eloisant
> Let me tell you I know why you don't see an "Amazon of Japan", apparently in here I'd have to calculate the sales taxes for every country where my products are sold through agreements of Japan-{said country}. Some countries don't even have agreements like Brazil so they are in a gray area.
AFAIK this is true for any other country, not just Japan. If you're in US, and you want to sell and ship products outside of US, you need to take care of the sales taxes and customs for each of the countries you ship.
Or you leave the burden to your customers, but they might not be happy to have to pay expensive custom to the mailman to get their package.
franciscop
Apparently it's either not a requirement or not so strongly enforced in the US and EU as it is in Japan, or that was my understanding from the conversation.
Update: searching a bit and reading about the EU sales taxes, there are few rules but overall it's pretty clear you either don't pay or pay local sales taxes even for international sales for low-volume B2C sales (sorry it's Spanish): https://www.carrilloasesores.com/post/iva-de-ventas-por-inte...
Naga
In Canada, it is a requirement to self-assess GST on purchases you make online. When you buy something online, you're supposed to fill out a form and mail a cheque to the government for the GST you should have paid on it. That being said, this is completely unenforced as well as unenforceable. Also, if you ask basically anyone in Canada they probably would have no idea this was a rule, but the rules are the rules.
https://www.canada.ca/en/revenue-agency/services/forms-publi...
Ndymium
I have a nano sized business to cover some server costs in Finland. Here are the EU rules as I understand them:
* Selling goods
- If selling to private persons in European Union fiscal territory (EUFT), add 24% (Finnish VAT).
- If selling to businesses in EUFT, no VAT.
- If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.
- Note that there are separate customs rules!
- If selling to private persons in EUFT, you need to register to the customer's country's tax authorities and add the customer's country's VAT, and then pay it later to the customer's country's tax authorities. EXCEPT if you only have an office in one country and you are selling to another EUFT country, and you only sell <= 10,000 € worth of services, then you can use your own country's VAT like normal.
o Or you can register to so called VAT MOSS (Value Added Tax Mini One Stop Shop) where you use the customer's country's VAT but you don't need to register or pay to their tax authorities, instead you send a quarterly report to your own country's tax authorities about all the sales you have done, then you pay them a calculated sum, and they will divide the paid VAT to all the countries based on the sales. Of course there is now a new VAT OSS that is somehow different from MOSS.
- If selling to businesses in EUFT, use reverse VAT (buyer is liable for VAT).
- If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.
EDIT: Turns out I have no idea how to format lists on HN.
ArkanExplorer
You don't need to charge VAT unless you hit these thresholds:
https://www.avalara.com/vatlive/en/eu-vat-rules/distance-sel...
Which at the lowest end is € 35,000 per country.
Countries like the UK for example have a VAT threshold of £85,000 for businesses located inside that country.
This is one of the problems of online marketplaces - they have VAT added to them, even when the individual (small) business doesn't need to pay it.
VAT is a big compliance burden for small businesses which is why every country has revenue thresholds under which you don't need to charge it.
Silhouette
Unfortunately, almost everything you're talking about there is about selling physical goods. The rules for electronic sales have been completely different for quite a few years now and are a labyrinthine mess that makes even professional accountants frustrated and national tax authorities screw up the most basic processes. In most cases, they also don't have any minimum thresholds at all, and the few concessions that have been made are quite recent.
kmoriarty
I just wanted to mention, our invite-only starts today, but we're working on making Stripe Tax available to all very very soon!
Either way, we will be reviewing and onboarding users as quickly as possible after you submit your interest!
rorykoehler
How long is soon? I'm asking as I'm in the middle of building a saas. I might get to payments functionality in about 2-3 weeks if all goes well. Should I wait or register interest?
kmoriarty
Shoot me an email with your account ID and I'll make sure you're enabled by the weekend! kmoriarty@stripe.com
scoot
Good summary. It's easy enough for EU VAT/MOSS, but this is the killer right here:
> you may be liable to collect and pay VAT to the customer's country's tax authorities
alibarber
I understand that from the 1st of July, the electronic services section will expand to all goods, potentially with some thresholds, so you should charge the VAT rate for that particular item at the customer's home country and submit that to the Finnish tax authority (under the OSS scheme).
exhilaration
These are the thresholds for VAT going into effect on July 1st:
IOSS (EU) <150 EUR
VOEC (Norway) <3000 NOK
HMRC (United Kingdom) <135 GBP
sdevonoes
> - If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.
I thought selling to businesses outside EUFT was the same as selling to businesses inside the EUTF.
Ndymium
Well I guess it would depend on the target country's specific tax laws.
jerrre
There are also a lot of thresholds that might apply to your situation. More rules to look up, but could simplify it to having less administration if your revenue is under a couple K's
bsears
Co-founder of Billflow here.
We were lucky enough to be able to integrate the Stripe Tax beta with Billflow. In my opinion this is the coolest thing Stripe is launched (For SaaS) since they came out with subscriptions. It just works™.
Implementing Stripe Tax was dead-easy, to get it working we essentially just had to switch a boolean to true on our subscription creation code.
Also, the new functionality of the upcoming invoice API is something we've been wanting for a while - being able to estimate the first invoice for a subscription _without_ the customer existing beforehand makes life so much easier when checkout is concerned.
Huge props to the Stripe team, love this product!
theflyinghorse
The feature is of course very nice, but the pricing is steep at 0.5% of your transactions. So I'm giving away 0.5% of my revenue (provided all of my revenue comes from sales) for the privilege of having my taxes calculated? That's on top of the 2.9%+30c per transaction that I already pay stripe?
TheRealPomax
Correct. But that's not what you're paying for of course, you're paying for the fact that you don't need to pay an accountant to double check these numbers: if they are wrong and the tax man comes after you, you get to hold Stripe accountable for any and all repercussions. You are paying Stripe--if you so choose--to take on the legal responsibility of getting it right.
nrmitchi
> if they are wrong and the tax man comes after you, you get to hold Stripe accountable for any and all repercussions. You are paying Stripe to take on the legal responsibility of getting it right.
Where exactly is this stated? As far as I can tell, all this does is say what taxes you should be collecting, and then collect them. It doesn't even handle (at this point) remitting payment to the appropriate jurisdications.
I see no evidence that if your taxes are collected wrong, Stripe will do anything other than say "Your accountant should have caught that, sorry." I see no evidence that by using this product, Stripe will indemnify you against tax issues (which yes, would go a long way to justifying the cost)
undefined
giansegato
I don't really think you're paying for accountability. That would involve some serious risk taking on Stripe side. I see no mention of this in the marketing material.
giovannibonetti
This is specially valuable if you are selling your product across multiple countries, which may have different taxes.
koolba
Is that legally binding somewhere? If they completely miss out that we were meant to collect X% for a municipality, will they be covering that out of their pocket?
corentin88
That’s also on top of Stripe Checkout (0.5%) and on top of Stripe Radar (0.5%). Stripe cuts about 5% of every SaaS in the end. That’s a lot of money.
kmoriarty
Hey! Kelly from Stripe here: Just to clarify, there's no additional cost for using Checkout, and Radar is per small per transaction fee (or included free with Stripe if you're just starting out!), not a variable 0.5% fee.
corentin88
Thanks for clarifying! That’s something I was looking at on the landing page and didn’t find that. So Checkout already includes Stripe Tax at no additional cost. That’s great to hear
bo1024
It seems like the thing that makes it steep is the percentage rather than a charge per transaction, right? Philosophically it's geared to the total value you generate rather than the value they provide to you.
xchaotic
Ben Evans once described Stripe as tax on Internet SaaS. For a moment I’d thought it was Stripe admitting the same.
ceejayoz
The same "tax" existed before Stripe, and it was higher, in both overall costs and development complexity.
mixmastamyk
"The price of doing business."
kybernetikos
Credit card fees in general are like an extra tax. And credit card companies have so much power they have pushed the cost onto all transactions, even those that use cash (by forcing merchants to eat the cost difference, they push all prices with that merchant up).
dangrossman
This is something people say often, but studies put the cost of accepting cash for retailers at 4.7-15.3%, which is higher than the cost to accept credit cards. If anything, it's the high cost of handling cash built into prices that's increasingly burdening credit card users in stores, not the other way around.
kybernetikos
I would take that as an argument that we should have better 'cash' that has lower costs to use.
swyx
i think that is generally a compliment though, not an accusation
Naga
That looks great, but that's a ridiculous pricing scheme. If you invoice $100k in a year, you're paying $4000 to Stripe to manage your sales tax.
A lot of the issues with sales tax are not knowing your regulatory requirements and set up. I'd say that's probably worth $4k, but then going forward you still have to pay them that amount. I'd say it would be more worthwhile to pay an accountant to do that for you, and save the ongoing fee. You will have to pay an accountant anyways to do your tax returns. I'm an accountant and my firm often does sales tax returns for our clients. Now, if you're making $1 million a year, that's $40k you need to pay Stripe for the privilege of not worrying about sales tax, compared to a few thousand you'll pay your accounting firm to do it.
The API and integration options are great and I hope Stripe is successful. Really, if they are, it means I can just charge more for my services.
Edit: As others have pointed out, I'm bad at math. I'm going to leave my shame up here but I realize it's $400, not $4000. Just goes to show you that accountants are just like regular people, and that you shouldn't rely on your accountant doing things off the top of their head not using Excel. The order of magnitude difference really shifts my opinion of it.
vvoyer
Nope, if you have $100k transactions in a year, it will be $100,000 * 0.005 = $500 not $4,000 (And 0.4% is when you make more than $50,000 in a month)
I too made the mistake of doing amount*0.05 when they provided me the pricing in beta.
This is why I went with them, if I can't do a simple percentage computation I'd rather not do the taxes myself.
And if you're making $1M a year, it will then be $4,000. And I guess that's still cheaper than having your accountant going through all your Stripe documents, computing taxes while also, on your side, having to make sure you're 100% tax compliant. Maybe at $10,000,000 it will start being a bit pricey, but at that point you'll most probably discuss with Stripe to reduce that fee.
GordonS
When I saw this announcement, I had fully expected these new features to be included as standard - I was a bit surprised when I saw they were charging for them.
That said, I think the pricing is well worth it if you're selling B2C. EU VAT is complicated, and I presume state-level sales tax in the US is too.
If you're selling B2B in the EU however, then all you really need to do it collect and validate VAT registration numbers. Now, the EU API for this is pretty crappy, and has a ridiculously low rate limit - but still, it's not difficult to do. Indeed, I did it in a few hours when I was setting up Stripe for a B2B micro-ISV one or two years ago. I actually think that VAT ID validation should be included as standard - not chargeable.
vvoyer
Hey there, I believe validating VAT numbers is outside of the Stripe tax pricing and part of the Customer Tax IDs API, without any extra charge. Maybe someone from Stripe can confirm?
https://stripe.com/docs/billing/customer/tax-ids
And yes, if you sell only to B2B Europe and everyone inputs their VAT number you're fine (because you actually don't have to charge VAT, it's a reverse charge). Stripe tax do know this nowadays.
But that's actually not so common, people signing up for products usually have no idea what the VAT number of their company is. But they are capable of getting a credit card and giving you a business address.
In this case, you have to compute VAT rates based on the country of the customer.
(This is not an accounting advice, just personal experience!)
maccard
> If you invoice $100k in a year, you're paying $4000 to Stripe to manage your sales tax.
The pricing on the page says 0.4% - that's $400/year not $4,000
> Now, if you're making $1 million a year, that's $40k It's $4,000 by the above.
> compared to a few thousand you'll pay your accounting firm to do it.
It's not _just_ the money you pay the accountant to do it once, you need to get all of the data about where the customer is purchasing from to your accountant in a format they can use. Also, depending on your accountant, international sales tax is unlikely to be their forté - they might handle different states, but can they handle the varying rules in EU countries?
Naga
Yeah, you're right, my coffee hasn't kicked in yet.
For the amount I thought you would pay for Stripe to do that, you could have hired an accountant to figure all of that out for you on an ongoing basis, but for the actual price that's a pretty good deal to not have to think about it.
My opinion on accounting services has always been that it's nothing that a business owner can't do themselves since it's not really that complicated, but it's never worth the time when you can pay someone who already knows what they're doing. Stripe Tax falls into that category for me too, it's cheap enough that it makes it not worth it to do it yourself.
mgkimsal
> you could have hired an accountant to figure all of that out for you on an ongoing basis, but for the actual price that's a pretty good deal to not have to think about it.
Even if you have accountants on tap, they may disagree. I did some work on a project where we were needing to deal with tax calculations (was using taxjar). At least one of the questions was about when we should be charging tax on certain 'extras', like... shipping. Their accounting firm said "no, you don't charge tax on shipping". Taxjar was automatically making that charge, and throwing off the expected numbers. After some digging, I found, at least in their primary state, they should have been collecting tax on shipping, but I don't think it was uniform across all the other states.
So... they had an accounting/books person on staff, and this question went up to their 'tax person'. I think it was either a general attorney or a tax specialist or something - this was their 'oracle/decision maker', and they were just flat out wrong.
This probably wasn't the case 20 years ago, when they were putting all their records in to an electronic system the first time, but... rules change. Keeping up with them is not a trivial thing, and when millions of dollars are on the line... you can make expensive mistakes.
wly_cdgr
The replit guy needs to study your post so he can learn how to handle mistakes the right way
weehoo
What happened with the replit guy?
ayewo
From 2 days ago: https://news.ycombinator.com/item?id=27428400
wly_cdgr
replit guy strutted out his hardscrabble kid from Jordan sob myth while "apologizing"
tnorthcutt
1. Kudos for handling your mistake gracefully.
2. As of this writing, almost everyone responding to you is using 0.4% as the pricing, when their page shows it's actually 0.5% for the scenario you described ($100k in a year). The lower rate only kicks in if you process over $100k in a _month_.
Unless they've changed their pricing details in the last hour, that's another great reason to let them handle this! Clearly we, collectively, don't have the attention to detail required for this ;)
invisible
I'm not sure if I'm missing your comparison, but an accountant doesn't calculate how much/which tax should be paid in real-time based on the business and the user's location and then automatically account for that.
I don't know how much it's worth, but properly supporting tax takes a lot of effort to do correctly in real-time.
jnsie
> I'm going to leave my shame up here but I realize it's $400, not $4000. Just goes to show you that accountants are just like regular people, and that you shouldn't rely on your accountant doing things off the top of their head not using Excel. The order of magnitude difference really shifts my opinion of it.
Fair play to you!
hmoy
$4k? Isn't $0.4k as it's 0.4%?
tehwebguy
I think it would be $400?
beilabs
Wouldn't most online businesses just need to collect the taxes for the customers that their business operates in?
Posting this on the basis that there should be no stupid questions when it comes to tax.
For example; an Australian business needs to collect GST for Australian customers only. Americans accessing the Australian service would not be obligated to pay GST and as the Australian business doesn't have a US entity wouldn't have to collect US state taxes.
andylynch
You would hope so, but no. A good example is that the UK now requires online business to collect UK VAT on sales to UK customers, even when the seller is abroad - there are many similar rules and this will really help people, especially smaller businesses who really face big barriers in dealing with these rules.
gardaani
Paddle has a good article about this: "..the taxes apply not only to where your company has a physical presence (an office or employees) but to where your customers are based." https://paddle.com/blog/global-sales-taxes-for-software-comp...
It seems to be a huge mess. Even if you know how much to pay for different countries, registration for paying taxes can be painful.
andylynch
Even domestically - US interstate sales tax rules are a mess too.
fuzzylama
That's not how it works within Europe. You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries. There are exceptions, for example up to some total revenue you may be allowed to collect local sales tax instead. This is what I've understood, but it probably gets more complicated in real.
raverbashing
> You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries
Correct for the 1st part, on the 2nd part there is a VAT MOSS (One Stop Shop) where you report it in one place your sales/VAT for all the EU countries
stevoski
No, that’s not correct at all.
Each country has their own laws about how tax works for online sales, and who is expected to pay it.
You can choose to ignore what governments in other countries expect. But that’s your decision.
brk
That kind of used to be the way it worked, but not for the last several years. Now you are generally expected to know about the tax laws and requirements for the customers region and collect and submit tax accordingly.
Avalara (https://www.avalara.com/us/en/products/sales-and-use-tax/ava...) has been one of the go-to software platforms for this purpose. At least according to my wife, who is a CFO, and generally has to manage this stuff.
jokethrowaway
This is great! ATM I'm banning all EU end users from purchasing my SaaS unless they're a business because the cost of handling VATMOSS is just not worth it.
It also definitely played a role in choosing to do a B2B service over a B2C one.
So now the choice is:
- File VAT yourself, pay 3.5% + some pennies to Stripe - Pay 5% to Paddle and they file VAT for you
Definitely glad to see more competition in this area.
tzs
What makes handling VATMOSS costly for an Saas?
I deal with the software end of dealing with VAT for a small company that sells downloadable software and technical support for that software. We've not found it costly at all.
It took one guy a couple days or so to get registered with Ireland for VATMOSS.
To do the quarterly report for filing, I run a fairly simple script I wrote that produces a CSV file with one row per country giving the total sales and the total VAT we collected for that country, and someone uploads that to a form on the Irish tax authority site, which I understand is a simple and straightforward process.
To keep track of VAT rates, we use https://vatlayer.com/
Their API for getting rates is very simple, and their free plan allows 100 API calls per month. It is one call to get the rates for all VATMOSS countries.
The reporting script needs to get exchange rates to calculate the VAT in EUR for those sales where the customer paid in GBP or USD. The EU makes that information available in this handy XML document: https://www.ecb.europa.eu/stats/eurofxref/eurofxref-hist-90d...
That contains the exchange rates between various currencies and EUR for the last 90 days. The rate you want for VATMOSS is the rate on the last business day of the quarter you are reporting for, so there is a little bit of calculation to figure out which day's rate to use.
They also have one that gives the most recent day if that better floats you boat: https:///www.ecb.europa.eu/stats/eurofxref/eurofxref-daily.x...
If you need a specific range of dates for specific currencies, they've got that covered too. Here it is for USD and GBP: https://sdw-wsrest.ecb.europa.eu/service/data/EXR/D.GBP+USD....
Specify the range by adding query parameters startPeriod=YYYY-MM-DD and endPeriod=YYYY-MM-DD.
jokethrowaway
Mainly implementing different VAT rates. My accountant also would charge extra to do the EU VAT filing.
Right now I'm just charging no VAT worldwide (and we keep track of the totals in US states to see if we approach limits) or VAT for my country.
Also, given we're a B2B service, most of our customers are actual businesses, so we would be adding complexity to our payment flow for not much gained.
Thanks a lot for vatlayer, that looks great and I will definitely keep it in mind!
sandlerben
Actually, Stripe's payment fees are lower for European merchants (because card interchange is lower) so it would be more like 1.9% plus some pennies.
blntechie
Stripe makes such complex products appear so simple. Their product pages are art of work. Amazing company.
MichaelApproved
Like, every single time. Their execution is amazing.
Serious question, have any of their products had a poor rollout?
I’m not asking about a feature you’d prefer that’s missing. I’m asking about something being buggy, poorly documented, or having a confusing marketing page.
porker
> Serious question, have any of their products had a poor rollout?
Yes. Payments with SCA2. Very poorly documented when rolled out, and TBH the docs aren't much easier to navigate now once you get off their "do everything immediately client-side" happy path.
I've never known them to be buggy, but in this space there isn't room for bugs.
Silhouette
Yes, their PSD2/SCA roll out was disastrous. The documentation is marginally better now, and to their credit they've also produced a lot of example code repositories showing end-to-end implementations of various scenarios in various programming languages. But then, the epic scale of a full API integration and the moderate scale of even a Checkout integration today, as shown in those docs and sample repos, only highlight how painful the whole process has become. Then you look at the modern services that are going back to what early Stripe did so well, handling most of the pain of charging customers for you with very straightforward integration requirements, and the differences are stark.
lolinder
The new additional transaction fee for Stripe Billing is awkward. They charge an extra 0.5%, which is fine, but it always comes out as a separate transaction instead of being added on top of their regular transaction fee. Sometimes it gets withdrawn from your balance after they've already deposited your earnings, leading them to make a withdrawal from the bank.
Not a huge deal, and I still love Stripe!
Get the top HN stories in your inbox every day.
Note that if you are just interested in US sales taxes, and only need to collect tax in the ~1/2 of the states that are part of the Streamlines Sales Tax (SST) project, you can have your tax rate calculation, registration, reporting, and filing all done for free.
The member states of SST have agreed to pay for those services from several tax SaaS companies. (There is one catch: to avail yourself of this, you must collect tax for all SST states, even though you might be below the threshold in some of them).
The companies participating are Avalara, TaxCloud, Sovos, and Accurate Tax.
For small online businesses I suspect that a lot more can take advantage of this than you might expect. Here's a map showing the SST member states [1]. Although it is missing some big states that you probably do a lot of business in (California for instance), a lot of those big states have quite high thresholds for sales or number of transactions before tax kicks in.
Some of the companies that provide the fee SST service will also add non-SST states for a fee. If you only need one or two non-SST states, it will still probably come out cheaper than using Stripe (and will include reporting and filing).
[1] https://www.streamlinedsalestax.org/